Madhya Pradesh High Court
Commissioner Of Income-Tax vs Sharma Motor Service on 3 October, 1997
Equivalent citations: [1999]235ITR89(MP)
Author: A.K. Mathur
Bench: A.K. Mathur, Dipak Misra
JUDGMENT A.K. Mathur, C.J.
1. This is an income-tax reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue and the following two questions have been referred by the Tribunal for answer by this court :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was entitled to claim depreciation at 50 per cent, instead of 33-1/3 per cent, as provided by the law ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the order of the Commissioner of Income-tax under Section 263 and restoring the order of the Assessing Officer ?"
2. The assessee is deriving income from plying of buses. The Assessing Officer, while completing the assessment, granted depreciation at 50 per cent, on the passenger buses plied by the assessee. The Commissioner of Income-tax held that the order of the Assessing Officer was erroneous and prejudicial to the interests of the Revenue. Therefore, he invoked power under Section 263 of the Income-tax Act and set aside the order of the Assessing Officer and remanded the case to the Assessing Officer. On appeal by the assessee, the Tribunal, by order dated December 2, 1993, set aside the order of the Commissioner of Income-tax and affirmed the order of the Assessing Officer granting 50 per cent, depreciation. Therefore, the Revenue approached the Tribunal to refer the case to this court and, accordingly, the aforesaid two questions have been referred by the Tribunal.
3. We have gone through the record and after considering the matter, we are of the opinion that the view taken by the Assessing Officer appears to be justified. The question for consideration in this case is as to what is the business of the assessee ? The assessee is doing transport business of transporting passengers from one place to another. Therefore, the business of the assessee is a transport business and as all the vehicles are employed in that business, he is entitled to depreciation to the extent of 50 per cent. The relevant entry which existed at that point of time reads as under :
"Motor buses, motor lorries and motor taxis used in a business of running them on hire."
4. Therefore, if the assessee is doing the business of plying motor buses/ motor lorries/motor taxies, then he is entitled to 50 per cent, depreciation. The paramount consideration is that he must be doing the business of running them on hire. An owner who holds a transport fleet of buses on permits for hiring them, then he will be doing a transport business and will be entitled to depreciation. Likewise, if the owner uses motor lorries for goods carriage as a regular business, then also he is entitled to depreciation. Similarly, if the owner is doing the business of giving his motor cars on hire as taxies, then also he will be entitled to get the depreciation to the extent of 50 per cent. Therefore, the view taken by the Tribunal appears to be well justified.
5. We, therefore, answer both the questions in favour of the assessee and against the Revenue.